Sherwin-Williams (SHW -0.88%) is the global leader in paints and coatings. While that may not sound exciting, the stock has generated monster returns over the past decade, skyrocketing over 1,000%. However, pandemic-driven supply-chain disruptions could pose a problem for this company in the coming quarters.

In this Backstage Pass video, recorded on Oct. 27, 2021, Motley Fool contributors Travis Hoium and Brian Withers discuss Sherwin-Williams' third-quarter earnings, highlighting the risks and benefits for shareholders.

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Travis Hoium: I'm going to take over next and talk about Sherwin-Williams. Speaking of pricing power, this is a company that does have a lot of pricing power, but their issue this quarter was the fact that they couldn't make enough product. Revenue was up just slightly in the quarter to $5.15 billion, but earnings per share were down 26% to $1.88.

Outlook remains steady for the year at $7.16 to $7.36 per share. The theme here is strong demand for their products. They're seeing higher raw material costs, which was something that we've talked about across the board for manufacturing companies, but they had some huge supply chain issues related to Hurricane Ida in some of their plants, of their suppliers being down. That basically meant that people weren't able to get the products that they wanted, particularly in the consumer segment.

One of the things that I thought was interesting in their report, the Americas Group revenue was down slightly in the quarter, but their Consumer Grands Group revenue was down 22.8%. That was partially due to a divestiture, but that was where we saw most of the impact of the supply that they couldn't get into the system. The Performance Coatings Group sales were up 17.4%. That's a group that's still going strong, and that's a high margin business. I'm sure that's where they're putting their attention. It seems to be challenged in meeting its own demand for at least the next few months or quarters. Management said that they could have basically grown the business I think in the high single digits if it wasn't for supply chain shortages that they had in the market. That's something to keep an eye on.

The market seems to have overlooked that challenge for now, but that's something I'll be keeping an eye on with a company like this. But they have been able to push higher prices, which is a positive. It just remains to be seen whether they're able to do that as they bring more supply to the market. An interesting dynamic here in the paint business.

Brian Withers: Yeah. I look at Sherwin-Williams and there's a lot going for it. It's 42 years of consecutive increasing dividends. You can see it's grown faster than the market over the past year and great returns for shareholders. With everybody spending more time at home, whether they're working at home or schooling kids from home, paint is one of the most inexpensive ways to refresh a room. This demand that they're seeing are people at home wanting to upgrade their space and the paints are a critical part of that process.

Travis Hoium: The challenge is they got to get the product to market. We were actually one of these people who were painting our house in the third quarter, just so happens. The person that we used to paint the house couldn't find Sherwin-Williams Paint. [laughs] We had to match it with another paint supplier. It was just crazy to me to see that there was literally no paint in the Minneapolis area. It was the entire region, it wasn't just one store. The challenge there is that this is not a recurring revenue business. I'm going to paint my house once every 10, 15 years. That's lost sales that they're not going to get back in the short term. We'll see how quickly they can get over these challenges.